Wells Fargo may face (even more!) fines over insurance and mortgage practices
Inside Subprime: November 30, 2017
By Alex Huntsberger
According to a report in the Wall Street Journal, beleaguered lender Wells Fargo might face even further action from government regulators. In a letter sent to the bank earlier this month, the Office of the Comptroller of the Currency formally reprimanded Wells Fargo for overcharging customer through their mortgage and auto lending divisions. The regulator is considering a formal cease and desist order and may also levy yet another fine.
The revelations of improper conduct are not new. Earlier this year, the bank admitted to charging up to 570,000 customers for auto insurance that they did not need and to improperly charging fees to some customers for extensions on their mortgage rate locks. In November, the Wall Street Journal also reported that the bank has been overcharging customers trades made on foreign exchanges.
These unnecessary insurance policies may have pushed as many as 20,000 auto loan customers into default, the bank announced in July. The purpose of these policies is to make sure customers are insured even when they do not have auto insurance or cannot produce the proper evidence of it. In these cases, however, the insurance policies were added onto loans where the customers had already provided proof of insurance.
In regards to the fees on the rate lock extensions, these were fees that should have been paid by Wells Fargo itself, not their customers. They were fees that resulted from a delay in the mortgage application process, and are only to be paid by the customers themselves when they are the reason for the delay. When the bank is the reason for the hold-up, they are the ones who are supposed to pay. And yet, customers were charged the fee anyway, even when Wells Fargo was at fault.
On Tuesday, prior Wall Street Journal’s report, Wells Fargo announced that it would be exiting the personal insurance business entirely.
This letter from the OCC is just the latest episode in a series of Wells Fargo scandals. Beginning in September 2016, when the Consumer Financial Protection Bureau slapped the company with a $185 million fine for opening millions of fraudulent customer accounts, it’s been a rollercoaster of revelations, firings, investigations, public lashings, and even more fines.
To learn more, check out our updated Wells Fargo scandal timeline.